Facing jail, protest leader Navalny condemns Putin's Russia

KIROV, Russia (Reuters) - Protest leader Alexei Navalny said on Friday he would destroy the political system under President Vladimir Putin that was "sucking the blood out of Russia", after state prosecutors demanded he be jailed for six years on theft charges.

Navalny says the trial, in the industrial city of Kirov, is intended to sideline him as a potential rival to Putin. A six-year term would keep the anti-corruption campaigner in prison until after the next presidential election, scheduled for 2018.

Navalny, the most prominent opposition leader to be tried in post-Soviet Russia, denied the charge of stealing 16 million roubles ($482,000) from a local timber firm that he was advising in 2009 while working for the liberal Kirov region governor.

He looked shocked and exchanged nervous smiles with his wife Yulia after Prosecutor Sergei Bogdanov set out the prosecution's demands at his trial in Kirov, 550 miles northeast of Moscow. Judge Sergei Blinov will deliver a verdict on July 18.

Navalny, 37, later regained his composure and delivered an emotional denunciation of Russia's political system, saying the trial had been ordered from on high - a reference to Putin - and hatched in a world of "fantasy and fairy tales".

"I declare that my colleagues and I will do all we can to destroy this feudal system made in Russia, destroy this system of power, under which 83 percent of the country's wealth is in the hands of half a percent of the population," he told the court.

"Anyone who stands on the sidelines will just be helping the disgusting feudal system which sits like a spider in the Kremlin, the 100 families who are sucking the blood out of Russia."

Navalny helped organize the biggest anti-Putin protests since the former KGB spy rose to power in 2000. He has suggested the president ordered the trial to silence his criticism of what he calls a political class of "swindlers and thieves".

He says power has been concentrated in the hands of a few people, some of whom have become fabulously wealthy, largely by seizing control of raw materials or through corruption.

THORN IN PUTIN'S SIDE

His trial is seen by the opposition as the most significant in Russia since oil tycoon Mikhail Khodorkovsky was jailed in 2005 for fraud and tax evasion after falling out with Putin. Khodorkovsky's $40-billion oil firm, Yukos, was broken up and sold off, mainly into state hands.

The Kremlin denies using the courts for political ends and says it does not interfere in criminal cases.

Tall and clean-cut, Navalny has been a thorn in the side of the government and Kremlin since starting to campaign online against state corruption in 2007.

He established himself as a powerful speaker at the anti-Putin demonstrations that flared in December 2011, although they have faded since Putin's presidential election victory in March 2012. Since then, Putin has reasserted his authority and several opposition leaders have been charged with criminal offences.

Other opposition figures say the trial is intended to prevent Navalny fulfilling his dream of becoming president and, before that, running for Moscow mayor in September.

"The absence of Navalny from the Moscow elections ... will mean elections in Russia have died once and for all and that there is no longer any chance of a peaceful, gradual change of the system," said fellow protest leader Grigory Chkhartishvili, a novelist who writes under the name of Boris Akunin.

Navalny acknowledged this year that he has presidential ambitions. Putin, 60, is eligible to seek a fourth presidential term in 2018, potentially extending his rule to nearly a quarter of a century, but has not said what his plans are.

Navalny is popular among Russia's growing middle class and urban youth, but it is unclear whether he has much support among the working class and in the provinces, Putin's power base.

The independent polling group Levada found last month only 3 percent of people would vote for him as Moscow mayor.

Bogdanov told Kirov's Leninsky district court that evidence presented during the trial "fully proves that Navalny ... committed a crime" and sought six years in jail for him and five years for an alleged accomplice, Pyotr Ofitserov.

Defense lawyer Olga Mikhailova said there was no evidence against Navalny and the trial was intended to discredit him.